CICC has released a research report stating that China Telecom (00728, 601728.SH) third-quarter revenue and net profit were in line with the firm's expectations. The firm maintains its "Outperform" rating on the company's H-shares with a target price of HK$6.3, and also maintains its "Outperform" rating on the A-shares with a target price of RMB 7.3, while keeping its earnings forecasts unchanged.
In the first three quarters of 2026, China Telecom reported operating revenue of RMB 380.1 billion, down 3.6% year-on-year, and net profit of RMB 26.2 billion, down 14.8% year-on-year. Excluding the impact of value-added tax, the company's comparable net profit maintained solid year-on-year growth.
In the third quarter, the company's operating revenue fell 3% year-on-year to RMB 121.1 billion, while net profit declined 14.7% year-on-year to RMB 6.62 billion, with comparable net profit continuing to post solid year-on-year growth.
CICC noted that China Telecom's core revenue for the first three quarters reached RMB 359.3 billion, remaining broadly stable year-on-year after excluding the impact of value-added tax. Of this, communications revenue stood at RMB 313.1 billion, with mobile users registering a net increase of 2.84 million in the third quarter and wireline broadband users adding a net 210,000. Smart revenue reached RMB 46.2 billion, with daily Token usage growing rapidly.
With the growing adoption of AI applications and the expansion of user scale, CICC believes that the smart business is poised to become a driver of the company's future revenue growth.
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